Oct 27, 2026 earnings call — Mozaic ramp and strong demand for nearline drives
Seagate reported September quarter revenue of $4.2 billion and guided December revenue to $4.8 billion ± $100 million.
Revenue $4.2B (est $4.1B) · EPS $7.68 (est $7.44) · Next-quarter revenue outlook $4.8B
Key quotes
"We are scaling drive capacity through areal density rather than relying on higher drive unit production."
"The vast majority of our nearline exabyte supply is now allocated under long-term supply agreements through calendar 2028 with some cloud customer agreements extending through calendar 2030."
"This month, our Board approved an increase in the quarterly dividend to $0.76 per share."
Analyst Q&A 11
exabyte growth timing and Mozaic impact
Q (Christopher Muse · Cantor Fitzgerald): Analyst asked why exabyte growth slowed in September and whether prebuilding supported a big December step-up. He also asked if Mozaic means exabyte growth stays above mid-20s into calendar 2027.
A: Management said the company is on a clear trajectory with another step-up expected in December and remains focused on product staging and areal density transitions. They reaffirmed 25% as a good exabyte growth target and said staging is needed to sync with customers and data center needs.
"So we are on a trajectory and I think 25% is a really good number for that." — William Mosley (CEO·CHAIR)
pricing and cost per terabyte drivers
Q (Erik Woodring · Morgan Stanley): Analyst asked how to think about the recent strong pricing per terabyte and why cost-per-terabyte declines slowed recently. He asked if Mozaic transitions caused temporary factors.
A: Management said pricing strength is driven by sustained long-term demand and that product transitions can temporarily raise early costs like scrap and lower yields. They expect future transitions to offer more cost-reduction opportunities and view current demand as strong and stable.
"But during some of the transitions, we get early cost, things like scrap that go up." — William Mosley (CEO·CHAIR)
capex level and HAMR strategy
Q (Amit Daryanani · Evercore): Analyst asked if 4%–6% of revenue for capital spending supports mid-20% exabyte growth long term and whether to build capacity organically or buy it.
A: Management said HAMR leadership cannot be bought and must be developed internally, and the 4%–6% CapEx model is sufficient to support their growth plans. They noted new tools help areal density and that they can meet the 25% exabyte target mainly through technology transitions within that CapEx range.
"So first order, there is no way we can acquire the HAMR technology, the leading-edge technology." — William Mosley (CEO·CHAIR)
platters per drive and cost benefit
Q (Sreekrishnan Sankarnarayanan · TD Cowen): Analyst asked why the company stays at 10 platters instead of adding more, and whether that limits future cost declines. He also asked if 4%–6% capex risks share loss.
A: Management said there is no technical barrier to adding platters, but they prefer the known platform for simpler customer qualification and cost leverage across generations. They reiterated confidence in the 4%–6% capex range and said demand remains strong with supply allocation already visibility into calendar 2028.
"But there's no technical reason why we can't start adding platters." — William Mosley (CEO·CHAIR)
KV cache and AI impact on storage demand
Q (Asiya Merchant · Citi): Analyst asked how KV cache adoption affects unconstrained exabyte demand and whether physical AI is already driving exabyte inflections.
A: Management said new technologies and AI accelerate data growth and make data more valuable, and KV cache boosts efficiency between application and storage layers which further drives demand. For physical AI, they said it's not yet a direct driver but could create edge storage needs and is being watched closely.
"I do think we are watching a lot of new technologies come out that are increasing the value of data very quickly." — William Mosley (CEO·CHAIR)
quarterly pricing strength and sustainability
Q (Mark Newman · Bernstein): Analyst asked what caused the big quarter-on-quarter ASP jump and whether that mid-teens quarterly ASP growth can continue.
A: Management said in-quarter dynamics like transition scrap can affect cost and yield, but the pricing trend is driven by long-term demand rather than one quarter. They said they expect continued step-ups as contracts renew and do not see demand destruction, so the trend is likely to continue near-term.
"From my perspective, the pricing dynamic is really still about the long-term demand." — William Mosley (CEO·CHAIR)
contract pricing mix and exabyte trajectory
Q (Wamsi Mohan · BofA): Analyst asked how much of the price gains were contracted versus floating and whether exabyte growth will accelerate through the fiscal year as transitions finish.
A: Management said most pricing upside comes from rolling contract renewals and operational efficiency, not one-time exabyte shipments. They said there were no product transition issues and that Mozaic 4 will continue to accelerate, with Mozaic 5 following, supporting the 25% exabyte goal.
"I don't think we had any issues with product transitions" — William Mosley (CEO·CHAIR)
share buybacks and customer timing risk
Q (Benjamin Reitzes · Melius): Analyst asked how much free cash flow will go to buybacks starting March and whether customer delays (power, shells, chips) affect purchases.
A: Management said their model targets returning about 75% of free cash flow over time and they will opportunistically repurchase shares starting next quarter. They said they are not seeing customer delays and they avoid overbuilding, working to align production timing with customer needs so products do not sit idle.
"In general, the storage layer doesn't use a whole lot of power compared to the compute layer." — William Mosley (CEO·CHAIR)
on-prem enterprise demand shift
Q (Karl Ackerman · BNP Paribas): Analyst asked if enterprise on-prem customers are now adopting high-capacity drives and whether penetration is changing with agentic CPU deployments.
A: Management said enterprise and OEM customers historically lagged on highest capacity points but are beginning to catch up, showing demand both for small on-prem deployments and larger channels that serve cloud instances. They see demand across both on-prem and cloud-served channels.
"I would say typically, those enterprise and OEM customers lagged quite a bit, the highest capacity points, and they're starting to not lag as much." — William Mosley (CEO·CHAIR)
external component cost impact on guidance
Q (Joseph Quatrochi · Wells Fargo): Analyst asked how much external component costs hit gross margin and whether December guidance embeds that impact.
A: Management said higher external component costs partially offset internal cost declines, but those external impacts are included in the December guidance. They said guidance shows strong improvement across revenue, gross margin, operating margin and EPS despite managing external cost increases.
"But everything is included in the guidance, and the guidance is showing an improvement, not only -- strong improvements, not only in revenue, but also in gross margin, in operating margin and of course, EPS." — Gianluca Romano (CFO)
HAMR progress and future share of nearline
Q (Joseph Cardoso · JPMorgan): Analyst asked for an update on HAMR share timing through fiscal '27 and whether constraints change the path to higher HAMR share of nearline.
A: Management said 4 terabyte-per-platter HAMR is on track with successful qualifications and field units, and they are more optimistic about a faster 5-terabyte transition than last quarter. They expect 5-terabyte to extend to 6-terabyte per platter and remain confident in their HAMR roadmap and targets.
"Everything on the 4 terabyte per platter is on track." — William Mosley (CEO·CHAIR)